GM talks with Mahindra, others on Hummer: sources

By Jui Chakravorty Das

NEW YORK (Reuters) - General Motors Corp (GM.N) is in talks with Indian automaker Mahindra & Mahindra Ltd (MAHM.BO) and automakers in Russia and China about selling its Hummer brand, sources familiar with the matter said.

One source close to the discussions said Mahindra is not very interested at this time, as it has plans to launch its own trucks and sport utility vehicles in the U.S. market.

Mahindra would like to launch those vehicles under its own brand and has signed up more than 300 dealers to distribute a pickup truck next year. But talks with GM -- still in initial stages -- are continuing, the source said Thursday.

GM declined comment. Mahindra was not immediately reachable for comment.

The sources did not name the Russian and Chinese companies talking with GM.

GM, which has said it will try to raise up to $4 billion through asset sales, has hired consultants and investment bankers to review the Chinese market for potential buyers for GM assets, one of the sources said.

The struggling U.S. automaker, which has lost more than $51 billion over the past three years, said in June it was reviewing its Hummer brand, which has hurt GM's image at a time when consumers are demanding more fuel efficiency.

Amid high gasoline prices, interest in buying a brand that gets only nine to 15 miles a gallon has been thin and continues to shrink, one source said.

Hurt by an association with gas-guzzling excess, Hummer's U.S. sales fell 40 percent in the first half of the year.

As part of a move to cut 300,000 light trucks from its planned production over the remainder of the year, GM has idled or slowed work at its Hummer assembly plants to run down inventories of unsold SUVs.

MAHINDRA CHALLENGES

A purchase of Hummer by Mahindra -- which bid for Ford Motor Co's (F.N) British brands Jaguar and Land Rover and lost out to rival Tata Motors Ltd (TAMO.BO) -- would present major challenges for the Indian automaker, one adviser familiar with the matter said.

Mahindra is concerned that it lacks the scale to wring costs out of Hummer production, and any deal would probably have to include a commitment from GM to keep supplying products for several years, the adviser said.

Also, the upscale image of the Hummer brand is a long way from the Mahindra-badged small pickup truck slated to hit U.S. dealers next year and its Scorpio SUV to be brought in after.

The vehicles are expected to be marketed on their low price and relative fuel economy -- a sharp break with Hummer's established strategy of marketing tough-looking, military-derived vehicles to wealthier consumers.